To abide by orders of big bosses, banker from top to bottom disburse credit without taking care of its quality. If Regional Head of a bank asks verbally a branch head in his region to disburse loan of one crore in a month's time in agriculture sector or face transfer to critical place , the branch head is bound to ignore the quality and disburse loan as charity. Similarly if top officials of bank who abide by verbal orders of Ministers are promoted to ED or CMD level , the culture of flattery and bribery cannot stop.
And hence it will not be astonishing and wrong to say that Farm credit may prove to be a disaster for public sector banks in near future as wholesale and bulk credit provided to power sector or to big corporates during last few years under pressure of Chidmabram government or at the instance of politicians have now disturbed the sleep of present top bankers .
It is reckless credit made by bankers to win the hearts of ministers and to get quick promotion and incentive from Ministry of Finance which has proved to be major contributor of bad debts in public sector banks, not to speak of small banks but even in top banks like SBI, PNB, OBC, UBI and so on. Similarly farm credit is going to be a matter of concern for bankers in near future. Because politicians first build pressure on banks for achieving unachievable target of agriculture credit and then advocate waiver of loan given to farmers to enhance their vote banks.
In case of bulk credit , top officials get the award for surpassing target and retire and in case of low level or mid management officials, they too sanction smaller loans carelessly to earn some commission or to earn the praise of immediate boss or to get quicker promotion and retire . In both the cases it is banks which has to suffer , it is depositors who have to suffer in interest, it is investors who are given no dividend or less dividend on money they invested. If the culture is bad, both bulk loan and small loan becomes poison in the long run, one is deep poison and the other is slow poison.
Bankers use to hide bad debts by applying various tools available in their clever mind. They are expert in ever greening of loan. They may recover bad debts by sanctioning greater amount of loan to defaulters or may hide bad loans by frequent restructuring of high value loans of big borrowers.
Farm loans given in the name of Kisan Credit Card or to increase agriculture production are considered always standard because banks tend to finance Rs.200 to adjust default of Rs.100 of a farmer. Similarly high value loans are rescheduled and restructured frequently on some plea or the other to keep the account always standard. But how long ?, ultimately they have to accept the ground reality and swallow the poison. Bad debts accumulated during last two decades are slowly surfacing and disturbing not only bankers but also the RBI and the Government sitting at centre.
Politicians and top officials, all are beneficiaries of all reckless financing. When the assets become bad , these clever gentlemen abuse global situation or natural calamity and get rid of accountability. Bankers then demand that CBI and CVC should be kept out and away from banks and they say that if bankers are burdened with inquiry , they will fail to achieve credit target fixed by Ministry of Finance. This evil culture is not new . But the culture has taken deep roots in banking sector .Similarly Politicians will talk of GDP and insist bankers for credit growth . None of them bother of quality and judicious growth.
This has become fashion of saving skin and for perpetuating corrupt practices in the name of economic liberalisation and reformation. For last two decades and more, bankers are enjoying freedom and complete liberty in making their own loan policy, their recruitment and promotion policy to attract meritorious personnel and in fixation of interest rate and deciding their priorities in financing. Still banks are sick and more surprisingly the banks which were treated as safe and growing bank two decades ago are the worst sufferer of bad debts. Banks which used their whims in promotion and recruitment in the name of merit are now facing the music of bad debts and that of capital crisis in complying with Basel III norms.
But the million dollar question is who will bell the cat?
When ministers and top officials of RBI or that of Ministry of Finance are birds of same feather, who will fax accountability on banker .
Bankers are supposed to be the backbone of the economy of a country , but unfortunately clever bankers and clever politicians of this country have completely broken the bone of the economy .
When stock market increase , top bankers as well as politicians will take credit of their policy initiative and take credit for their performance .When the same stock market falls next day , they will blame God for bad monsoon, or abuse global recession or put blame of opposing political parties or blame administrative ineffectiveness. They never try to find out the real cause of the sickness because it will endanger their own existence.
Malpractices continue to jeopardize the health of bank and all PSUs because none of institute play their role honestly and effectively. After all common men do not understand the intricacies of banking or that of the financial management of a country, they understand the language of price rise and get jobs and houses for their livelihood. Whey common men cry , clever politicians talk of calamities and adverse global situation . They do not want to accept that policy of so called reformation have benefitted only a few lac wealthy families of the country.
It is top rich class people who have earned billions of rupees due to liberty given to them by clever government in the name of liberalisation, privatisation , globalisation and reformation. It is true that number of billionaires have increased from tens to a few hundreds in India and a few billionaires have also got upper ranking in the list of billionaire in the world. But the painful and bitter truth is that during last two decades , number of poor people have doubled and the intensity of poverty have multiplied.
Income of ninety per cent of population of India may have gone up by a few hundred or a few thousand of rupees , but they are still unable to afford quality food, quality education , quality health care and even pure water for their family. They cannot dream of electricity , sanitary facility , real justice from police or judiciary or even a respectful life.
Bankers will have to learn giving credit to real needy persons and stop distributing bank loan as charity . Government will have to learn to make legal and administrative system strong and effective to send the clear message to wilful defaulters .
GOI will have to inculcate good culture of repayment and punish those who avail bank loan and divert the money to some other corners. GOI will have to teach a lesson to bankers who after taking bribe sanction loans and then get rid of punishment .GOI will have to punish those retired bankers who indulged in reckless financing for self interest and got happy retirement. GOI will have to give value of experienced officers available in banks and discard the policy of giving whimsical promotions to youngsters in the name of so called merit .
It is the sin committed by retired bankers and present day top officials that present day bank officers in junior or mid level management are suffering and they are denied their share in wage hike.
GOI will have to stop loan waiver culture and stop building pressure on bankers for achieving credit target or for arriving at compromise settlement with defaulters.
Yes if there are genuine reasons for default, banks should cooperate , but such cooperation should not be used as a tool to conceal one's fault and malicious decision. Yes it is necessary to increase loaning to help the economy grow , but this necessity should not be used to earn illegal money.
GOI will have to learn to take decision based on the merit of the case and the real ground truth of bankers .GOI will have to stop flattery based promotion and bribery based recruitment.
When the credit approval committee or board of directors of bank are birds of same feather ,one cannot dream of healthy decisions and it will be foolish to imagine that such team of corrupt officials will ever take beneficial innovative initiative and exhibit creative performance in the larger interest of banks as well as the country.
When the committee set up for recruitment of judges or bank officers for higher post are constituted of corrupt officers and corrupt politicians, one cannot dream of judicious decision. It is therefore necessary to punish a few real and true guilty officer and guilty politicians to send a message to all others. It is necessary to boost up the morale of good, honest, hard working and performing officers to create an atmosphere conducive for growth and real achievement of target.
CBI, CVC,CVO, IB and all investigating agencies have to be used to gather information about corrupt officials of all departments including banks and then make all concerted efforts to weed out corrupt officers from the system and it is equally necessary that media also plays a positive role in exposing the misdeeds of corrupt officers and politicians without any bias towards any caste or community or political affiliation of the guilty person. It is the need of the hour to make all departments effective and performing, and then only common can dream of really 'Achhe din' preached by Modi and his party.
Rising Loan Default Will spoil not onlybanks but also Kill Indian Economy And Make Lives of Bank Staff Miserable.
Respectable Wage Hike is a Remote Possibility. Politicians come and go , it is ultimately the bank staff who are to suffer and who have to remain always in tension either due to low pay or due to increased work pressure.
SBI's farm credit faces default pressures on debt wavier plans-Business standard-3rd Of July 2014
State Bank of India the country's largest lender, on Thursday said its farm loan portfolio has witnessed a rise in defaults on plans for an agriculture debt waiver scheme in Telangana and Andhra Pradesh.
"The payment discipline has been vitiated due to plans to waive off loans. At present, defaults are restricted only to these two states and hope it does not spread to other regions. The rise in defaults was not due to drought conditions," SBI Chairperson Arundhati Bhattacharya told reporters after its annual general meeting here on Thursday.
Earlier, Telangana Chief Minister K Chandrasekhara Rao had said the financial liability arising out of the debt waiver scheme would be around Rs 19,000 crore, way lower compared with the promised debt waiver size of Andhra Pradesh.
Commenting on overall pressure on asset quality, the SBI chairperson said stress in the system was less now and overall numbers should start looking better. However, some of the accounts are on edge.
The bank has sold non-performing assets (NPAs) worth Rs 3,000 crore in the quarter ended June 2014. SBI would continue to offload NPAs in each quarter. The amount could be lower as many large accounts had been dealt with, the SBI chief added.
The gross NPAs of the bank stood at 4.95 per cent at the end of March 2014, up from 4.75 per cent a year ago.
The bank posted credit growth of 13 per cent in the first quarter. It expects to grow the loan book 15-16 per cent this financial year.
Asked about capital plans, she said the bank is well capitalised at 12.44 per cent now. It has room to raise additional capital through tier-II bonds as well as use rights issue or institutional placement for equity offering.
In 2013-14, the bank had raised equity capital of Rs 8,032 crore through qualified institutional placement (QIP). The government had also infused Rs 2,000 crore in the bank.
LInk Business Standard
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